State District Judge Belinda Hill told Yates, 41, she couldn't order her to commit herself to the hospital but set the bond based on Yates remaining at the facility until her March 20 trial.
Prosecutors had asked that bond be set at $1 million.
"The reality is, this is a case about five dead children," prosecutor Kaylynn Williford said outside the courthouse.
Yates' defense attorney, George Parnham, said he was unsure if Yates or her family could pay the $20,000 in cash needed for the $200,000 bond. He had sought a $50,000, which would have required $5,000 in cash.
"What we wanted for Andrea all along, you know, is for her to be in a mental hospital," her ex-husband, Russell Yates, told reporters. "I'm all in favor of her being given a bond so she can least be in a hospital a while before trial."
Bondsman Billy Pastor testified that the bond would be written on the condition that Yates be committed to Rusk State Hospital to await trial. But prosecutor Joe Owmby said he worried that the court and bondsman would have no recourse if Yates left the state hospital.
Yates is accused of drowning her children, ages 6 months to 7 years, in the family's bathtub in 2001.
During her original trial, jurors rejected her insanity defense and found her guilty in the deaths of three of the children. Prosecutors presented evidence about the other two but Yates was not charged in their deaths.
Her convictions were overturned last year because the state's expert witness, forensic psychiatrist Park Dietz, had testified that shortly before Yates killed her children, television's "Law and Order" series broadcast an episode about a woman with postpartum depression who drowned her children. No such episode had aired.
As she did in the first trial, Yates has pleaded innocent by reason of insanity. She would be sentenced to life in prison if convicted of capital murder.
"She is severely mentally ill," her attorney said Wednesday. "She is on a heavy dosage to this day of antipsychotic medications."
By Pam Easton